Local Government Finance (England) Special Grant Report (No.101) (HC 942), on Personal Social Services Performance Grant for 2002-2003

Fourth Standing Committee on Delegated Legislation

Tuesday 2 July 2002

[Mrs. Irene Adams in the Chair]

Local Government Finance (England) Special Grant Report (No. 101)

10.30 am

The Minister of State, Department of Health (Jacqui Smith): I beg to move,

That the Committee has considered the Local Government Finance (England) Special Grant Report (No. 101) (HC 942), on Personal Social Services Performance Grant for 2002-03.

I am pleased to introduce this special grant report, which lays down the conditions and allocations attached to the £50 million personal social services performance fund. It is an exciting development and the first grant to councils that is differentiated by performance. It works in line with the principles set out in the local government White Paper that was published last year and the Government's overall drive to raise standards and reward good performance in our public services. I will give more detail about how it will work in a moment.

The grant will allow councils to invest and innovate in the important area of intermediate care. In the national health service plan, we set out a new programme to promote independence for older people by developing a range of services delivered in partnership with primary and secondary health care, local government servicesin particular, social careand the independent sector. The development of intermediate care services is a critical element in the programme. It focuses on preventing avoidable hospital admission, ensuring that older people can be discharged from hospital when they are ready, to services that enable them to regain their independence, and avoiding premature dependence on long-term care.

We have set targets, and excellent progress is being made towards the 2003-04 target of 5,000 extra intermediate care beds and a total of 220,000 more people in receipt of services in various settings. The 2003-04 target of an extra 1,700 non-residential places has already been exceeded, but we are not complacent. That is why this year's personal social services fund focuses on intermediate care and building effective working relationships between social care and the NHS.

Mr. Paul Burstow (Sutton and Cheam): I am grateful to the Minister for giving way, especially on the issue of intermediate care and Government targets, which, as she said, have been exceeded. Have the Government built in a measure of quality of outcome to ensure that, for example, we do not see an increase in emergency readmissions once the intermediate care phase of six weeks has been completed?

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Jacqui Smith: I assure the hon. Gentleman that we are evaluating the long-term success of intermediate care provisions. That will take place over two or three years. We have also been careful to ensure that evaluation takes place at a local level and have published a progress review on the website on intermediate care development and some of the lessons that we have learned for the future. With intermediate care, we are concerned to provide both the extra places for people who need the support and the quality that those people rightly expect.

The bulk of the £50 million performance fund£48 millionwill be allocated to all authorities on the basis of a combination of the standard spending assessments for the elderly and other adults. That will ensure that all councils have a chance to improve. The remaining £2 million is retained centrally to fund intervention in poorly performing councils and the dissemination of best practice. Next year, the fund will rise from £50 million to £100 million.

Although each council will get its fair share, the grant conditions will differ between councils based on the social services star ratings that were published at the end of May. These are based on the first ever comprehensive assessment of social services performance, combining information from inspections, performance indicators and in-year monitoring. They provide a rounded view of how councils with social services responsibilities are doing. They show that some councils are doing superbly, others are struggling and need outside help, and many are providing decent services, but could do better. That is why we need incentives to maintain improvement. The star ratings show that the prospects for improvement are good69 per cent. of councils are rated as having good or excellent prospectsbut councils need to see the benefits of improving their star rating, which are what differentiation by performance is designed to show.

This performance fund is the first grant to be differentiated by social services star rating, though the NHS performance fund has been differentiated by hospital star ratings for more than a year now. Next year, most of the Department of Health's specific grants to councils will be differentiated in this way, further building on incentives to improvement. The grant is a pilot for how the new system will work. Our intention is to give three-star councils real freedom in how they spend their grant money. We know that they can provide high-quality services, and we have the confidence to step back and let them get on with spending their own money.

With regard to the performance fund, the spend will not be limited to intermediate care. In addition, the best councils will not need to check their schemes with the Department of Healththey can go ahead as soon as the special grant report has been approved. At the other end of the scale, we want to ensure that zero-star councils spend their grant money appropriately. For the performance fund, we shall ensure that social services inspectors approve their plans before they can spend any money, and that their schemes are audited in greater detail.

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That is not the only respect in which the performance fund grant is unusual. It is designed to promote innovation and creativity, so it is administered differently from other grants. Councils will have to plan not only how to spend the money, but decide what the money should achieve, and set targets to measure it. If they meet their targets, the performance fund money can be used to reward the staff who have made the differencefor example, through improving the working environment, buying IT equipment or investing in training or development. If the targets are not met, the money that would have been used on the reward will be invested in setting up another scheme. We have ensured that that is practicable by allowing a 55 per cent. carry over of money into the next financial year. These conditions are designed to encourage new ways of working and to incentivise staff to make the new projects effective. We are also requiring zero and one-star councilsand encouraging the restto evaluate this year's schemes, so that they can be shared on a website and the learning can help to make next year's schemes even better.

I should like to provide an example of the scheme, to give a flavour of how the fund will work. The scheme is based around intermediate care, because that is the area in which most councils will be required to spend the performance fund grant. The aims might be to increase the capacity of an existing intermediate care residential resource by developing a step-up facility and to improve access to therapy. The first part of the money would be spent on physical improvements to the building, including additional rooms for therapy activities, additional bedroom space and improved equipment for daily living. Targets and milestones could be the number of additional people receiving the service, the number of hospital admissions diverted to the step-up facility and the increase in levels of need that could be supported through the improved facilities. The reward element of the scheme, if the targets were met, could be used to provide additional facilities for users or stafffor example, improved refreshment facilities, internet access or more equipment. In that way, progress to develop new intermediate care services is spurred, authorities have both the resources and the ability to innovate and staff are rewarded for success with the knock-on effect for further effort and success.

We have made clear the Government's determination to improve standards in public services across the board. Social services are no exception. The principles of the Government's way forward to improve performance are to provide increased freedom for good performers, extra support for poor performers and incentives for continuous improvement. The grant, and the schemes that it will fund to fulfil those aims, will ensure that we go further to ensure that older people have the services that they need and deserve.

10.40 am

Tim Loughton (East Worthing and Shoreham): I welcome you to the Chair, Mrs. Adams. I believe that it is the first time that I have served under your chairmanship on a Committee.

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I welcome the Minister's comments. Opposition Members welcome the investment in social services, especially in intermediate care. However, as the Minister said, the new system of star ratings is based largely on a pilot. I have several questions to put to her on the material provided. It came as no surprise to us that half the local authorities with the top rating of three stars are Conservative-controlled, including Westminster, Wandsworth, Leicestershire, and Kensington and Chelsea. The Minister rightly outlined the rationale for the new star rating, which goes from no stars to three stars. However, what puzzles me about the report is that there appears to be no differentiation between zero-rated and one-star rated social services departments, other than the definition that is given of a zero-rated social services department. I could not find a single condition that applied only to zero-rated authorities. Zero-rated departments are grouped together with one-star rated and, in some cases, with one-star and two-star rated departments. If I was a member of a one-star rated department, I would be miffed if the conditions attached to the grant given to my department were no different to those that applied to a zero-rated authority. Will the Minister elaborate on the differentiation?

As the Minister said, the aim of the performance fund is to raise the standard of performance where that is most needed in each social services department. What is the rationale behind specifying that the performance fund grant must be spent on intermediate care, if it is clear that the grant would be better spent elsewhere in a particular social services department? For example, the prospects for children's services in Haringey are graded on the star ratings table as poor. The council therefore is not serving children well, but it is serving some of the people well in terms of other services. Intermediate care services are directed largely at the elderly, so how will the grant help raise the standard of children's services in Haringey? The star rating, which the Minister introduced in May and on which the grants are based, dealt with adults' and children's services. Will the Minister say when we will see a balancing of grants for the other part of that star rating? What happens if a council's star rating changes, for example from a two star to a one star, and has not prepared an evaluation? Who will carry out the evaluation? Will it be internal, will there be extra resources for administering it, and will there be sufficient training for the staff who must carry it out? We all know how the cost of best value added to councils' bills. How much of the grant will be taken up by the administrative and bureaucratic evaluation process, rather than be targeted to the sharp end, where it is needed?

The press release of 29 May stated, and the Minister mentioned this morning, that the value of the performance fund is £50 million. Why has the grant report allocated only £48 million, by my calculation? What has happened to the remaining £2 million? If it has gone in central charges, that seems a rather expensive way of producing the report.

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On the question of inspection bodies, which are key to all this, the commission for social care inspection is to take over responsibility for social services performance ratings. Can the Minister tell us when the commission will be established, whether it will need primary legislation, who will head it and what resources it will have? It must have been something of an embarrassment that the new National Care Standards Commission had been in operation for only 18 days before the Secretary of State announced that it would cease to exist. Can the Minister tell us how much money was wasted on that abortive organisation?

On delayed discharges, which are at the heart of the special grant report, under the Government's new proposals, local authority social services will have used their budgets to cover the cost of acute beds blocked by patients who are fit to be discharged from hospital. The Government promised to consult with local government on the implementation of those proposals and perhaps the Minister can tell us how that consultation has gone. Since the Secretary of State's announcement on 18 April, the Government have said little about the details of those proposals, including the costs involved for social care.

On the penalties for local authorities that have high bed blocking rates, I gather that the evidence shows that 40 per cent. of all delayed discharges from hospitals in England are delayed for more than 28 days. Of the remaining 60 per cent., 19 per cent. have to wait between 14 and 28 days and 17 per cent. are delayed for between 8 and 14 days. In the light of those statistics, can the Minister reassure us that local councils will not be forced to reduce any social care services in order to pay for the Government's inability to tackle bed blocking? For example, Walsall, which received a zero star rating in the report, has an extremely poor record for children's services, as well as adult services. How will the Government's new proposals for delayed discharges sit with any attempts made by the metropolitan district in Walsall to direct more resources towards improving children's services?

On the question of the costs associated with delayed discharges, a recent letter to Lord Astor from Lord Hunt states:

''We do not know the average cost of delayed discharges per day.''

On what basis will social services departments be fined for not dealing with delayed discharges according to the Government? Will part of the performance grant have to be set against the penalties placed on local authorities that do not come up to scratch in the Government's eyes?

What role will the social services inspectorate and the new commission for social care inspection have in monitoring and administering the Government's new proposals? How will it be possible to prevent inappropriate discharges to residential homes? What will happen when discharge from the acute sector is delayed because of a lack of community health services or community equipment? Who will pay then? What will happen if there are residential beds available but

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no staff to man them, and will people being discharged from hospital take priority over people who are waiting to move into residential care from their own homes, simply because the authority is trying to avoid being penalised and fined?

Annex D of the report mentions repayment of unspent grant and the Minister referred to a carry over of up to 55 per cent. of unspent allocation of grant moneys. Is that that same as unallocated grant? If the social services department has earmarked that money for specific projects but it has not been spent, because of building delays, for example, will it be penalised in the same way?

Annex D also states in paragraph 11:

''If a local authority uses grant monies to purchase any capital asset, the Secretary of State may recover the full market value of any assets purchased if those assets are disposed of or cease to be used for the purposes for which the grant is made.''

What will happen when a local authority has invested in a capital project, such as a new building, that is later seen to be redundant and a new, superior care facility is required? If the authority sells off that facility and wishes to use the money to invest in a related but not directly comparable facility elsewhere, will it lose that money and therefore be incentivised to continue with an out-of-date facility?

I have put a range of questions to the Minister, as she would expect. No doubt she will not be able to answer them fully now, but she might provide more detailed responses later. I do not underestimate her ability to answer every question in full and frank detail.